June 26, 2002

Re: BOT Meeting, 6/20/02

 

Dear Mayor, Trustees & Village Manager:


The June 20th meeting addressed many significant issues and residents were given the opportunity to participate in the dialogue. In such a short period ideas could not be elaborated. Consequently, at the risk of redundancy, the below comments are submitted for your consideration.

Gross Utilities Tax

Anecdotally, this tax revenue appears to be favorable to individual residents. However, an objective appraisal requires quantification. Therefore, whoever on Village Staff that is performing the financial modeling function should prepare an appropriate evaluation. A high degree of accuracy is not needed – an order of magnitude would suffice. Several elements that should be included are:

  1. Utility tax revenue would result in Village property tax avoidance
  2. The median household income in Briarcliff is $147,000. Thus, the out-of-pocket cost for a household is only about 60 cents for each one dollar of property tax, which is deductible for income tax purposes.
  3. The pass-through to the consumer could be equal to, less or more than the tax revenue. Conceptually, it would be more than the utility tax revenue due to administrative costs and return on investment criteria of the private utility for rate setting purposes. Given the immateriality of the tax revenue estimate, I would expect that any mark-up would be negligible for purposes of the evaluation at hand.
  4. As mentioned at the meeting, a portion of the pass-through impacts commercial and tax exempt property owners. This condition is favorable to households.

The below schedule is a hypothetical example showing that the collection of the gross utilities tax could result in a net disadvantage to all categories of property owners.

In this scenario it is assumed that: (a) property tax benefit from utility tax revenue is allocated 80% to households and 20% to commercial property owners; (b) aggregate pass-through to consumers is equal to aggregate utility tax revenue; and (c) pass- through costs are allocated 55%, 5% and 40% to household, tax exempt and commercial properties respectively.

 

Property Tax Benefit Vs. Pass-Through Cost

 
Total
Households
Tax Exempt
Commercial
 

Property tax benefit
from utility tax revenue

$75,000
60,000
--
15,000
U.S. & NYS tax shield @ 40%
30,000
24,000
--
6,000
After-tax benefit
$45,000
36,000
--
9,000
 
Pass-through cost
$75,000
41,250
3,750
30,000
Tax shield
--
--
12,000
After-tax cost
$41,250
3,750
18,000
 
Net (unfavorable) impact
($ 5,250)
(3,750)
( 9,000)

 

Alternative Site for Library

The Mayor and Village Manager emphasized that realization of a possible cost avoidance benefit of some $1.8 million, by locating the library in the Municipal Building, was merely an illustrative scenario. I believe that the Manager asserted that a new firehouse facility could cost $2 million. My expanded comments are:

  1. Space assigned to the Fire Department is currently about 10,300 square feet. This includes a large meeting hall, vehicles, lounge and recreation, kitchen, cloaks, physical fitness, storage, and offices. Assuming meeting requirements remain unchanged and other functional areas are inadequate, additional space may be needed, say 1000 square feet. Should the building cost per square foot be proximate to the proposed construction cost for the library, namely $331, the building cost for the new firehouse could be in the order of $3,800,000. To this must be added land acquisition and improvement costs of, say $500,000.
  2. Therefore, in a figurative sense, cost to be incurred to accommodate the proposed fire truck and other vehicles is conceptually in the $4 million range, if a material cost avoidance attributable to the library is not realized. The purpose of this exercise in number tumbling is to accentuate that it would be a prudent due diligence precaution to obtain expert independent confirmation that the current proposal for the fire truck is the best solution.
  3. The Library Board suggested that its interim needs should be accommodated with a temporary modular extension if the new library facility would not be available for a long period. This recommendation, including cost consequences, should be evaluated in the Sullivan space analysis assignment.
  4. At a previous joint work session it was agreed by both Boards that the library architect would identify possible design changes, including associated cost changes, to the original library proposal. If possible revisions entail substantial cost reductions, are they reflected in the $3.8 million estimate used by the Village Manager to derive the hypothetical cost avoidance of $1.8 million?
  5. At the Library Board meeting of June 12, 2002 and again at the joint session of June 20th, the time line issue was extensively discussed. On the former occasion it was agreed that the Village Manager would prepare a Gant chart. Such a planning tool would be very useful in formalizing an implementation program for overall reconfiguration of Village space needs.

 

Space Needs Analysis

Because major capital expenditures are being contemplated it is prudent to engage an outside expert for advice and guidance. My extended remarks are:

  1. 1. It is only natural that Sullivan Architecture and Associates, Calgi/EMC and O’Dea Lynch Alatista, be focused on the more lucrative phases of design and construction. At times consultants tend to justify what their clients want rather than provide unpopular advice as to optimum solutions. Similarly, elected and appointed officials are at times prone to accede to demands of special interest groups.
  2. If practicable, and not too late, the engagement of Consultant Sullivan should be preceded by an in-house preliminary assessment. Participants in such an endeavor would be Department Heads -- DPW, Recreation, Library, Village Engineer, Treasurer, Village Clerk, Village Justice, Police and Fire. The primary objectives of this ventilation of views would be: (a) identify several feasible alternative configurations; (b) determine the significant pros and cons for each alternative; and (c) define the scope of engagement of the Consultant.
  3. It appears that the Village Manager is also the in-charge executive for this multifaceted, time-consuming construction/space project. It is evident that he has many other problems requiring executive focus. Accordingly, the BOT should consider appointing an experienced business project manager, who would report to the Village Manger and be responsible for over all oversight of the entire project, from inception to completion.
  4. What has been, is and will be the role of the Village Engineering/Building Department? Did the Village Engineer participate in solicitation of services of an outside consultant and the choice of Sullivan Architecture?
  5. The Village Manager appears to be in favor of committing to a contract with Sullivan without the expressed right of amending the unearned fee related to services that may not be required. At this writing I do not have a copy of the proposed contract of engagement. I do recall, however, that Sullivan displayed a schedule listing three broad categories of services with a separate price attached to each. Consequently, if the scope of each segment is clearly defined and not substantially performed, a price adjustment would be equitable. Conversely, if scope were expanded, Sullivan would request and be entitled to additional fair compensation.

 

Budget Transfers

The Village Manager stated that one reason the undesignated surplus balances as at May 31, 2002 (of the General and Water Funds) have not yet been determined is because all vendor invoices have not yet been received. It has been my understanding that an effective purchase order system is in effect. If this is so, and if the system includes coordinating purchase orders with receiving reports for goods received and confirmation by procurer of services performed, all information should be available to accrue liabilities for transactions of substantial value.

My question is, therefore, has the installation of an effective purchase order procedure been implemented?

 

Trump Performance Bond

It was stated that Trump was requesting that bonding of $13 million be reduced to about $3 million and that approval might be linked to reaching agreement for passive use by residents of the Trump Golf Course. At the meeting I pointed out that such use was a condition of project approval by the Planning and Trustee Boards. In expanding my remarks, I must remind the Board that this issue was brought to the forefront many months ago and appears on a list of conditions that Trump must fulfill.

Why was the temporary certificate of occupancy issued and the site plat signed before the passive use license was formalized? Are there any other conditions that have not yet been satisfied?

 

Board Minutes

The Board should be made aware that no BOT minutes for February 2002 are posted on the Village web site. Although I reminded the Village of this seemingly uneventful circumstance one or more months ago, no action has been taken.

Why am I interested in such minutiae? Some time ago the Village made a public appeal for a copy of the minutes and videotape for the December 7, 2000 BOT meeting, which contained vital information. I am certain that the BOT would want to avoid a similar embarrassing occurrence.

 

Village Manager's Report

The MTA and Manager will be meeting next month with a principal of the entity that owns the parking lot at Scarborough Station. At a previous BOT session the Manager reported that the MTA revealed that a reconfiguration of the entire parking area, private and public could yield 50 additional parking spaces – 12 for the private parcel and 38 for Briarcliff.

Hopefully, the BOT will take into consideration longer term needs before committing to such an arrangement, which appears to be merely a band-aid solution. Does the Board still have under advisement the appointment of an ad hoc committee to deal with the station parking issue?

 

Water Quality

At the previous BOT meeting I asked about the status of the report that the water quality Consultant was to have issued at the end of February, and then in June due to incomplete tests. This report, as I recall at the time of the Consultant’s engagement, was to include a point of view on the cement lining of the water mains. Will the findings of this report be shared with the public in a forthcoming BOT meeting?

 

Very Truly Yours,

 

NICHOLAS EVANCHIK